Good to talk to you. You were very funny at the Press Club thing, you have
got a very nice sense of humour.

TREASURER:

Well, you have got to enjoy life, don’t you John.

LAWS:

You bet, you certainly do.

TREASURER:

If you don’t have a joke with yourself you won’t get through the
day but anyway, look, I enjoy mixing it with journalists, they come down and
they ask their trickiest questions and sometimes you are able to hit them over
the fence and sometimes you have just got to block them. Sometimes they take
your wicket.

LAWS:

Well, rarely in your case I think.

TREASURER:

Well, you have got to get up early in the morning to beat these journalists,
John.

LAWS:

Why, do you?

TREASURER:

They are tricky people.

LAWS:

But you are fond of them, aren’t you?

TREASURER:

I love them all.

LAWS:

You really seem to have gone on the front foot in recent times as Steve Lewis
said on The Australian front page today, you have spoken out on multiculturalism,
you spoke your mind on that RU486 and now you are promising to do more for the
ladies to make Australia the most female friendly country in the world, what,
can you tell me what you mean by that?

TREASURER:

I would like to see a situation where women are able to pursue their careers,
their interests to the maximum extent where they don’t meet any barriers,
where we are able to harness the skills and the talents of the women of Australia
and I think it will make Australia a stronger place.

LAWS:

Do you think they have barriers put in front of them now?

TREASURER:

I think we are probably one of the best countries in the world, I think if
you look around the world there wouldn’t be that many where women’s
opportunity is as great as Australia but I still don’t think it is as
good as it could be. I think there are areas where we could make particularly
the work and family balance better.

LAWS:

Is that what you call a pressing issue?

TREASURER:

I think so, I think if you spoke to many women today, particularly mothers
that are looking after children they feel as if they are pressured, particularly
if they have got a part-time job – a lot of them do have part-time jobs
now – and I think they would say that if things could be done to make
things easier then I think they would welcome it.

LAWS:

What are the other issues that you think are very pressing for Australia at
this time?

TREASURER:

I think John, we still haven’t got our export regulation right, we are
in the middle of a big minerals boom, our ports are not coping with the way
in which they could be handling exports, there is too much State-based regulation
– I think that is a big problem for Australia – I think we need
national markets and electricity and gas and I have this idea of an energy freeway,
an energy freeway from Australia and other producing nations in east Asia to
the big consumer markets of Korea and China. If we can get our domestic markets
right we can become a global supplier and that will place us well for 10, 20,
30 years.

LAWS:

You have also warned that we face slower economic growth because of weak consumer
spending and the housing slowdown but the word I am hearing now is the housing
slowdown has slowed down is starting to come up again.

TREASURER:

Yes, it has been slowing really for some time, I would say a year, maybe two.

LAWS:

Yes.

TREASURER:

And that is a welcome thing, John, I think house prices got too high and as
a consequence of that you would expect a correction and we are getting a correction
and I want to see a correction. And once you have that correction then what
you would like to see is stable prices maybe small increments, but I don’t
want to go back to the situation where house prices were booming in the way
they were a couple of years ago – that is not good for an economy –
remember this point, the bigger the boom the bigger the bust.

LAWS:

That’s it.

TREASURER:

It always happens that way and so the reason we are against booms is we are
against busts and you try and take a little bit of air out of the balloon before
the balloon pops on you.

LAWS:

Why won’t you change the Grants Commission formula which determines how
the GST is divided up?

TREASURER:

Because I don’t set it.

LAWS:

But you can have it altered, can’t you?

TREASURER:

No, the formula is set by an agreement between the States.

LAWS:

Why is it that…

TREASURER:

They have agreed to this. This is a very important point here John, they have
agreed to this formula and given the role to an independent umpire. Now, in
every State in Australia today John, there is some State Treasurer complaining
that it is unfair to him. New South Wales are complaining, in WA they are complaining,
in Victoria they are complaining – every one of them has got a reason
why it is unfair to him – and the best way of handling this and it has
been going on now for 70 years, is to have an independent umpire and they can
set the formula between themselves – which they did.

LAWS:

But we are left with a situation now, you are telling me really that 50 per
cent are unhappy, 50 per cent of…

TREASURER:

No, I would say 100 per cent are unhappy.

LAWS:

Well, if 100 per cent are unhappy why don’t they use their noggins and
ask the independent arbiter to alter the situation. I mean if we are left with
a situation where New South Wales is going backwards and at the same time we
are subsidising other states it is a bit wrong.

TREASURER:

But it is not going backwards because of this.

LAWS:

No, well they were…

TREASURER:

It is going backwards because of the economic management of the State government.

LAWS:

…or the lack of.

TREASURER:

And this system by the way, it is not a new system this has been going well
basically since Federation. What happened at Federation was the big States agreed
– the big States of New South Wales and Victoria – that they would
come into the Federation, the consequence of that was that there would be a
sharing of revenue across the nation with all of the other colonies, this has
been going on for 100 years. Now, what has happened of course is that New South
Wales is now in financial trouble, they were warned about this, they were warned
not to rely on the property cycle, the property cycle turns down, they got into
trouble. So guess what the problem is? The problem is a formula and a system
that has been going on for 100 years.

LAWS:

Yes, but…

TREASURER:

(inaudible) politics, I mean…

LAWS:

… 100 years is a long time ago, I mean we are talking about something
that was designed 100 years ago, that is a bit old now.

TREASURER:

Well the sharing between the States in a Federation was designed 100 years
ago this happens in every federal system.

LAWS:

2 per cent growth in New South Wales compared to Queensland and Western Australia
with about 10.4 per cent and yet you are going to want to take money from New
South Wales. Should you be looking after them?

TREASURER:

What happens was that the Grants Commission, the independent umpire…

LAWS:

Yes.

TREASURER:

…said because royalties were strong in Queensland and Western Australia
they were taking some money off them, they redistributed it to New South Wales
and Victoria, New South Wales and Victoria have said they didn’t take
enough off and in Queensland and WA they are crying blue murder because they
were stripped of money. That is what is happening today. Now, you know, you
want me to you know, try and solve all of their problems…

LAWS:

No, no, no.

TREASURER:

…I think the best thing to do – and this is what the Federal Government
has done since the Grants Commission was established – appoint an independent
umpire, the States agree on the formula and if they can’t agree amongst
themselves they go off to this arbiter.

LAWS:

Well shouldn’t you be encouraging that at the moment?

TREASURER:

Yes, I do. I said yesterday, if you don’t like the formula go back and
get between yourselves and negotiate a better one.

LAWS:

Can’t you change the formula?

TREASURER:

No, this is a formula they have agreed between themselves.

LAWS:

Yes, but you can’t change that, that is beyond your powers?

TREASURER:

Well I am not going to, no, I didn’t set it, they agreed between themselves
and imagine if I walked in and I said well you see this formula you have all
agreed, I am changing it. And they would all turn on me.

LAWS:

But you can handle that.

TREASURER:

I can handle most things but you know, John, you know, here are we, we are
trying to run a national economy, we are trying to keep people in jobs, we are
trying to deal with world wide oil prices, I am going to focus on those things
rather than arguments between the States which has been going on for 100 years
and a lot of this John is just done for domestic political consumption, and
if New South Wales complain of unfairness it will always get a good run in New
South Wales, if WA complain of unfairness it will always get a good run in WA,
if Queensland complain of unfairness will always get a good run in Queensland
and that has been going on for 100 years, you know, the game doesn’t change.
The important thing I think is that we focus on the important things.

LAWS:

Okay, it is good to talk to you and again congratulations on the National Press
Club thing, I thought it was terrific…